Welsh Liberal Democrats Councillor for Cwmbwrla Ward, City and County of Swansea - Visit my main website at www.peterblack.wales

Friday, August 22, 2008

The cost of fuel

Plans by the Conservatives to use the Post Office Card Account scheme to allow low-earners to receive the same discounts on their energy bills as those paying by direct debit is actually very sensible. It makes me wonder why the government have not taken this step already.

One possible answer is that Labour have not yet settled the future of the Post Office Card Account. Maybe, once they have done that then a similar scheme will emerge. It needs to.

The only problem with the Tory scheme is that they have not gone far enough. In particular they are silent on the issue of pre-payment meters, which rip off some of the poorest in our society by charging a higher rate for gas and electricity. According to recent research commissioned for Energywatch, those on pre-payment meters can pay up to £142 more than people on direct debits on their combined gas and electricity bills. With around a quarter of poorer fuel customers on pre-payment meters, this has to be a priority.

And why have they not said anything about the excessive profits being made by energy companies. One of the major price comparison and switching sites has calculated that average household energy bills have gone up by over £550 a year. The average gas bill is now £646 a year, which is over double the figure five years ago, and electricity has gone up by just under 70% to £412.

Yet the companies themselves don't seem to be too keen to share the pain, preferring to pass the increases right down the line to the beleaguered customer. It is a pattern that is all too common among the private monopolies that the Conservatives created.

Last month, two major energy companies reported on how they are doing. Hard-pressed families will be delighted to know that Scottish and Southern made a profit which amounts to £136 per customer per year and intends paying a 4% dividend out to shareholders in both 2009 and 2010 yet they are talking about how difficult it will be not to pass on price increases to customers. Scottish Power has announced that it made £708m profit in the first half of this year. If this is typical, then all the energy suppliers are doing very nicely.

Will the Conservatives join with Vince Cable in ensuring that the £9 billion windfall the energy companies have received from the Emissions Trading Scheme is used to help reduce fuel bills for the most vulnerable customers? Will they support a full investigation by the Competition Commission into a market dominated by six huge energy companies that have effectively stopped competing with each other on what they charge their customers?

Finally, will the Conservatives support a systematic investment in smart meters, which display consumption costs and enable customers to plan their energy usage? Energywatch has shown energy usage can be reduced by between 3 and 15 per cent through changes in behaviour. With a 5 per cent reduction translating into a bill reduction of around £35, this can also help reduce fuel poverty. What is more, the introduction of smart meters that can be read remotely could also significantly benefit the energy companies.

The Tories have taken a significant step forward with a innovative idea to assist people with their fuel bills but much more needs to be done. This is just one part of the problem and it would be nice if the Conservatives would join the Liberal Democrats in adopting these other solutions as well.

The energy saving trust gives examples of grants that people can apply for to reduce their fuel bills - we really shouldn't waste energy, a warm home should be a basic human right for people in the 21st century.

Ten years of WAG and Wales is at the very bottom of the British economic league tables by GVA per head of population (‘An Overview of the Welsh economy” by Professor Brian Morgan, in ‘Who’s Who in Wales 2008’ published by the Western Mail, see especially page 9 thereof).

Is WAG ever going to address this issue?

When if finally does, maybe the people of Wales will not have to rely so much on handouts to meet their home fuel costs.

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